Federal Budget 2020: A Brief Overview
Listening to hours of budget talk isn’t exactly everyone’s favourite activity, though, in times of exceptional economic uncertainty, it seems more important than ever to try and get on top of how this announcement impacts us as individuals, businesses, and specifically, the design and construction industry. So as we power through what’s left of 2020, let’s see what was said in summary.
The recent federal budget put forward by Josh Frydenberg echoed out what appears to be the tone for the rest of our States and Territories, JOBS, JOBS, and JOBS. The government is focusing on getting Australians back to work, particularly young Australians. The Federal Government has cast the first of many stones used to lay a foundation that will attempt to jump-start Australia’s post-COVID economic recovery.
To note, the New South Wales government will deliver its budget on the 17th of November. It appears the rest of the states and territories are anxiously waiting to see how their counterparts seek to lay their stones in the post-COVID economic recovery. With Victoria being significantly behind the rest of the nation in its recovery, the dormant state will need to propose a series of large investments to try to play catch up to the rest of the country that has already achieved somewhat of a COVID normal.
To spare you some light reading on the four volumes of 300-page documents, the Federal budget has proposed various measures to help restart the Australian economy. A key takeaway from the budget was the government’s JobMaker program that essentially gives companies a 12-month hiring credit paid quarterly for hiring young Australians:
$200 per week credit for employing someone between the age of 16-30
$100 per week credit for those aged between 30-35
The government states that all businesses will be eligible for this program except those on JobKeeper ending March 2021, commonwealth, state and local government agencies, and those subject to the major bank levy.
A critical element of this proposal is that new employees must work a minimum of 20 hours per week and must have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one month within the past three months before they are hired. It is also important to note that the JobMaker Hiring Credit is designed to support new employment. Employers do not need to satisfy a fall in turnover test
In addition to JobMaker, the Federal government is also offering tax cuts to low to middle-income earners as a way to help reboot retail and domestic travel by putting more money into Australian pockets.
The government has outlined large asset write-offs to eligible businesses to help with cash flow and another way to help reboot retail and manufacturing. In a bid to reduce the number of redundancies, there have been some changes to fringe benefits tax; this will include exemptions for companies that retrain staff and redeploy them in other roles within their business.
Although low immigration levels are raising some flags when it comes to economic growth, the government has continued to invest in the residential construction market.
These investments include:
An increase up to 10,000 more spaces in the first home buyers scheme, allowing first home buyers to build or purchase a newly built property using only a 5% deposit
A billion-dollar injection into affordable housing
The removal of capital gains tax on granny flats
To support the growth in residential construction, the government has also proposed a $14 billion investment infrastructure. Some of this funding will be subject to a “take it or lose it” principle, incentivising states and territory governments to act quickly and use the additional funding or they will lose it.
Furthermore, the government has also pledged to support Australian manufacturing through a $1.3 billion injection to the sector; this coupled with tax incentives into research and development to further grow Australia’s manufacturing capabilities.
While the Federal government’s budget isn’t the budget some want to see, it appears the major goal of this budget has been to support businesses and generate jobs for millions of Australians. With state and territory budgets looming, the Federal government truly has cast the first stone and it’s now up to state and territory leaders to follow suit and begin laying their foundations into the new Australian economy.